After the verdicts it emerged that police had monitored Khyam repeatedly in the company of two of the July 7 bombers more than a year before the London suicide attacks, but that officers failed to act on the information.

Khyam, from Crawley, West Sussex, was found guilty of conspiring to cause explosions likely to endanger life between January 1 2003 and March 31 2004, possessing 600kg of ammonium nitrate fertiliser for terrorist purposes, and possessing aluminium powder for terrorism.

Four other men were also found guilty on the first charge: Waheed Mahmood, 35, and Jawad Akbar, 23, also from Crawley; Anthony Garcia, 24, from Barkingside, east London; and Salahuddin Amin, 32, from Luton, Bedfordshire.

Garcia and Mahmood were sentenced to at least 20 years in prison; Akbar and Amin face a minimum of 17 and a half years.

Two other suspects, Nabeel Hussain and Shujah Mahmood, were found not guilty. Garcia was also found guilty of possessing the ammonium nitrate fertiliser but Hussein was cleared of the charge; Shujah Mahmood was found not guilty of possessing aluminium powder.

The plan involved using 600kg of ammonium nitrate fertiliser as the basis for bombs that could have killed hundreds of people, with Bluewater shopping centre in Kent and the Ministry of Sound nightclub in London designated as possible targets, the Old Bailey heard. The group also intended to hit gas and electricity supplies.

Police broke up the plot in 2004 after a major surveillance operation uncovered links between the guilty men and Islamist militants abroad, including al-Qaida.

As soon as the verdicts were returned at the Old Bailey, it emerged that security services watching Khyam had seen him liaise closely with Mohammad Sidique Khan, the ringleader of the July 7 group. He also met another of the bombers, Shehzad Tanweer.

Relatives of some of those killed by Khan and his followers demanded to know why police did not act against Khan and Tanweer after they arrested Khyam and his six co-defendants in March 2004, a full 16 months before the July 7 blasts.

Khyam and Khan met at least four times in England while Khyam was under MI5 surveillance and in the final stages of his plotting. On one occasion agents even recorded the pair talking about terrorism. Khyam was seen meeting Tanweer three times.

Police and intelligence officers however regarded Khan and Tanweer as "peripheral" figures, and no action was taken against them even after Khyam and his co-conspirators were detained.

"The consequences of that level of incompetence were such that my son was killed. That is truly appalling," said Graham Foulkes, who lost his 22-year-old son, David, on July 7 2005.

"Could the bombings have been prevented? As a father who lost a son, I am drawn to that conclusion."

The Conservatives and Liberal Democrats demanded a full inquiry into why the security agencies failed to use their knowledge to prevent the July 7 attacks.

But in a Commons statement, the home secretary, John Reid, said an inquiry would "divert the energies and efforts of so many in the security service and the police who are already stretched greatly in countering that present threat".

Tony Blair's spokesman said there had already been an independent inquiry, carried out by the intelligence and security committee, which had been kept abreast of new information throughout the trial.

He said: "We shouldn't jump from the fact that new evidence has now been made public to the assumption that in some way 7/7 could have been prevented."

"We should recognise this for what it is," he said. "It is a success. It is the prevention of a very serious set of attacks. As a result many lives have been saved."

Jonathan Evans, who took over as director general of MI5 just over a week ago, issued a statement in which he denied the service had been "complacent", stressing that his organisation would "never have the capacity to investigate everyone who appears on the periphery of every operation".

"The attack on July 7 in London was a terrible event," he added. "The sense of disappointment felt across the service at not being able to prevent the attack, despite our efforts to prevent all such atrocities, will always be with us."

The Metropolitan police's counter-terrorism chief, Deputy Assistant Commissioner Peter Clarke, defended the failure to spot the links between the two terrorist cells.

He said neither Khan or Tanweer had been involved in the fertiliser plot, which was the overriding concern at the time.

He said the fact that the men had slipped through the net showed the scale of the problem was "quite simply quite staggering". Reflecting on the fertiliser bombers' contact with international terrorists, he added: "I have no doubt that there are clear links straight into al-Qaida."

Mr Clarke described the men as dedicated terrorists who had attended training camps in Pakistan and praised the Madrid bombings.

Details of the links to the July 7 pair were outlined in January last year, with the prosecution arguing that the information should be permitted as evidence. The judge, however, ruled that the men might not receive a fair trial if the connection were known.

According to police, Khyam wanted a series of bombs to go off at the same time or one after another on the same day.

One senior police source told the Press Association the plot was "the first time since 9/11 that we had seen a group of British people planning to commit mass murder". The source added: "The level of surveillance, the resources devoted to this were unprecedented. A lot of other policing activity had to stop in order to service this operation."

The British defendants, mostly students of Pakistani descent, grew up mainly in and around Crawley before becoming caught up in extremism. In most cases the men's paths to militancy started at fringe meetings at universities. They went on to attend terrorist training camps in Pakistan.

The five volunteered to fight in Afghanistan but were told they would be of more use to al-Qaida in Britain.

Imran Khan, a solicitor who was part of the defence team, complained that the trial had been conducted in an atmosphere of "hostility towards Muslims", and that there had been "desperate efforts to convict".

He added: "It is not an offence to be young Muslim and angry at injustices."